Porter's Competetive Forces Model on McDonald.
The threat of entry of new competitor
McDonalds, has make an entry barriers that others
competitor cannot enter the fast food industry easily
because, McDonalds have good product and service that customer
has learned to expect from fast food industry.
More people choose McDonalds globally compared to others fast
food like KFC or Burger King because McDonald's has cheaper
prices, and more diverse menu. The greatest strength was creating
an image in the minds of the people and introducing them to the
fast food culture. Delivery speed, customer care and cleanliness are
the core strengths on which these stores expanded. They created a
corporate symbol and their advertisement campaigns were highly
successful in establishing the brand image and logo in the minds
of the millions. Two main competitors generally identified with
McDonald are the Burger King and the KFC. McDonalds marketing
strategy is concerned with the internal resources.
The bargaining power of supplier
The market for soft drinks is dominated by a few companies.
Mainly Coca Cola and Pepsi. These soft drinks suppliers are the
only ones who have the capacity to match the needs of the global
fast food chains. The domination of a few suppliers in an industry
with more customers sets a high bargaining power for the
The bargaining power of customers (buyers)
Since the industry is flooded with many different kinds of fast food
and many different suppliers of fast food, then the buyer are in a
situation where many suppliers are offering products that have a
certain similarity.
Since the global fast food chains have been trying to match each
others successful products and product packages, then the buyers
can actually buy similar products from multiple suppliers, and that
is a situation the empowers the buyer. Furthermore, if the fast food
industry does not match the demands of the buyers and the
general consumer trends, then the buyers can choose not to buy
their product and convince others to do the same.
The threat of substitute products or services
The generic products of fast food are mainly considered as
convenience. Convenience and availability are the main drivers for
choosing fast food. However, this is backed up by focus on value.
Since the market as a whole consists of many differentiated fast
food companies, then the customers are used to having the option
of choosing the best value products.
The value of the substitute products in general matches the fast
food products and the consumer preferences of the consumers.
The substitute product offers both cheap value meals and quality
products for both ends of the quality scale that the fast food
industry normally targets. Furthermore, it offers healthy
alternatives to match the consumer needs and wishes.
The rivalry among existing firms in the industry
· McDonald however is far larger than most in the industry
with 31,000 outlets compared to its nearest hamburger
competitor Burger King, with 11,500 (Reuters, 2008). KFC
(owned by 2nd largest competitor Yum! Brands
(Yahoo7finance, 2008), Burger King and countless others
sell similar product to McDonald.
· McDonald traditional competitors include many of the other
fast food outlets across the country has been shown that
the presence of a Burger King, for example, will increase the
likelihood that McDonald will open near by. Thus, it can be
seen that the threat of competition from traditional rivals is
intense and should never be over looked.
· In general, McDonald and its main competitors (Burger King
Corporation, Wendy's International, Inc., Hardee's, and Jack
in the Box) are active in making fresh moves to improve
their market standing and business performance by
introducing their product innovation and launching many
outlets franchise.
· A good example of this would be the price competition
between multiple fast food chains’ value meals.
· Price dumping is normally a good way to attract new
customers, or stealing customers from competing
companies, and since it have been a growing consumer
trend to go after these value meals, then it is a product
category that have been adapted from most of the global
fast food companies.
· The high level of competition forces the individual
competitors to copy of each others are products and ideas
quickly since the competitors are always keeping an eye out
for new ideas for themselves, and so far there have been no
way of protecting a burger or sandwich recipe. In Malaysia,
every Chinese New Year, there will be a prosperity burger.
Thereby they have found a way to differentiate, which gives
them a bit more space to move in, and thereby a little less
fierce competition.
· The main competition goes through the branding. In
addition, the competition to create the strongest brand is
fierce. Firstly, normal advertising through TV, posters radiocommercials are regular. However, the biggest brands like
McDonald’s and Burger King have been branding their own
brand through piggy backing on other brands power.
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